This case is submittedto you by asking questions
about the facts, which you must decide from the evidence you
have heard in this trial. You are the sole judges of
the credibility of the witnesses, and the weight to be given
their testimony;but in matters of law, you must be
governed by the instructions in this charge. In
discharging your responsibility on this jury, you will
observe all the instructions which have previously been
given you. I shall now giveyou additional
instructions which you should carefully and strictly follow
during your deliberations.

1. Do not
let bias, prejudice or sympathy play any part in your
deliberations.

2. In
arriving at your answers, consider only the evidence
introduced here under oath and such exhibits, if any, as
have been introduced for your consideration under the
rulings of the Court; that is, what you have seen and heard
in this courtroom, together with the law as given you by the
Court. In your deliberations, you will not consider or
discuss anything that is not represented by the evidence in
this case.

3. Since
every answer that is required by the charge is important, no
Juror should state or consider that any required answer is
not important.

4. You
must not decide who you think should win, and then try to
answer the questions accordingly. Simply answer the
questions, and do not discuss nor concern yourselves with
the effect of your answers.

5. You
will not decide the answer to a question by lot or by
drawing straws, or by any other method of chance. Do
not return a quotient verdict. A quotient verdict
means that the Jurors agree to abide by the result to be
reached by adding together each juror’s figures and dividing
by the number of Jurors to get an average. Do not do
any trading on your answers; that is, one juror should not
agree to answer a certain question one way if others will
agree to answer another question another way.

6. You
may render your verdict upon the vote of ten or more members
of the Jury. The same ten or more of you must agree
upon all of the answers made and the entire verdict.
You will not, therefore, enter into an agreement to be bound
by a majority, or any other vote of less than ten Jurors.
If the verdict and all of the answers therein are reached by
unanimous agreement, the Presiding-Juror shall sign the
verdict for the entire Jury. If any Juror disagrees as
to any answer made by the verdict, those Jurors who agree to
all findings shall each sign the verdict.

These instructions are given you because your conduct is
subject to review the same as that of the witnesses,
parties, attorneys and the Judge. If it should be
found that you have disregarded any of these instructions,
it will be Jury misconduct, and it may require another trial
by another Jury; then all of our time will have been wasted.

The presiding juror or any other who observes a violation
of this court’s instructions shall immediately warn the one
who is violating the same and caution the juror not to do so
again.

During the trial it was permissible for you to take
notes. You may carry those notes to the jury room for
your personal use during the deliberation on the court’s
charge. You may not share those notes with other
jurors. Your personal recollection of the evidence
takes precedence over any notes you have taken. A
juror may not rely on the notes of another juror. If
you disagree about the evidence, the presiding juror may
apply to the court and have the court reporter’s notes read
to the jury.

When words are used in this charge in a sense that varies
from the meaning commonly understood, you are given a proper
legal definition, which you are bound to accept in place of
any other meaning.

During this trial, certain testimony and evidence has been
presented to you by way of deposition and may also have been
videotaped. A deposition consisted of questions and
sworn, recorded answers to those questions that were given
in advance of this trial. You must give this
testimony the same consideration and is to be judged in the
same way as if the witness had been present and testified
from the witness stand.

During trial, certain deposition testimony presented by
way of videotape contained various captions inserted between
separate excerpts of the deposition testimony. These
captions are not part of the evidence in this case and are
not to be considered by you as evidence. If your
recollection of the evidence differs from the caption, rely
on your recollection of the evidence.

Answer “Yes” or “No” to all questions unless otherwise
instructed. A “Yes” answer must be based on a
preponderance of the evidence unless otherwise instructed.
If you do not find that a preponderance of the evidence
supports a “Yes” answer, then answer “No.” The term
“preponderance of the evidence” means the greater weight and
degree of credible testimony or evidence introduced before
you and admitted in this case. Whenever a question
requires other than a “Yes” or “No” answer, your answer must
be based on a preponderance of the evidence unless otherwise
instructed.

A fact may be established by direct evidence or by
circumstantial evidence, or both. A fact is
established by direct evidence when proved by documentary
evidence or by witnesses who saw the act done or heard the
words spoken. A fact is established by circumstantial
evidence when it may be fairly and reasonably inferred from
other facts proved.

If you answer questions about damages, answer each
question separately. Do not increase or reduce the
amount in one answer because of your answers to any other
questions about damages. Do not speculate about what
any party’s ultimate recovery may or may not be. Any
recovery will be determined by the court when it applies the
law to your answers at the time of judgment. Do not
add any amount for interest on damages, if any.

In this charge, the parties, entities and documents shall
be referred to as follows:

“Lycoming” includes AVCO Corporation and its unincorporated
division, Textron Lycoming Reciprocating Engine Division,
which division is also known as the Textron Lycoming and/or
Lycoming Engines division of AVCO Corporation.

“MSA” means the Master Supply Agreement and includes
Addendum No. 1 and Addendum No. 2 to the MSA.

You are instructed that Interstate Forging Industries, Inc.
and then Interstate Southwest, Ltd. owned and operated the
forging facility in Navasota, Texas that produced Lycoming’s
crankshaft forgings. You are further instructed that
the court has determined as a matter of law that Interstate
Southwest, Ltd. may bring its claims and the claims of
Interstate Forging Industries, Inc. against Lycoming,
including claims against Lycoming relating to the MSA.

QUESTION NUMBER ONE

Did Lycoming fraudulently induce the extension of the MSA
through the Second Addendum to the MSA?

You are instructed that the law prohibits a person or
entity from inducing another person or entity into entering
a contract through fraud.

Fraud occurs when—

a. a party
makes a material misrepresentation,

b. the
misrepresentation is made with knowledge of its falsity or
made recklessly without any knowledge of the truth and as a
positive assertion,

c. the
misrepresentation is made with the intention that it should
be acted on by the other party, and

d. the
other party relies on the misrepresentation and thereby
suffers injury.

Fraud also occurs when—

a. a
party fails to disclose a material fact within the knowledge
of that party or actively conceals material facts within the
knowledge of that party,

b. the
party knows that the other party is ignorant of the fact and
does not have an equal opportunity to discover the truth,

c. the
party intends to induce the other party to take some action
by failing to disclose the fact, and

d. the
other party suffers injury as a result of acting without
knowledge of the undisclosed fact.

An expression of opinion that is false, made by one
claiming or implying to have special knowledge of the
subject matter of the opinion

“Special knowledge” means knowledge or information
superior to that possessed by the other party and to which
the other party did not have equal access.

Answer “yes” or “no.”

Answer: YES

QUESTION NUMBER TWO

Did Lycoming commit fraud on Interstate?

Fraud occurs when—

a. a party
makes a material misrepresentation,

b. the
misrepresentation is made with knowledge of its falsity or
made recklessly without any knowledge of the truth and as a
positive assertion,

c. the
misrepresentation is made with the intention that it should
be acted on by the other party, and

d. the
other party relies on the misrepresentation and thereby
suffers injury.

Fraud also occurs when—

a. a
party fails to disclose a material fact within the knowledge
of that party or actively conceals material facts within the
knowledge of that party,

b. the
party knows that the other party is ignorant of the fact and
does not have an equal opportunity to discover the truth,

c. the
party intends to induce the other party to take some action
by failing to disclose the fact, and

d. the
other party suffers injury as a result of acting without
knowledge of the undisclosed fact.

“Misrepresentation” means:

A false statement of fact; or

A statement of opinion based on a false statement of
fact; or

A statement of opinion that the maker knows to be false;
or

An expression of opinion that is false, made by one
claiming or implying to have special knowledge of the
subject matter of the opinion

“Special knowledge” means knowledge or information
superior to that possessed by the other party and to which
the other party did not have equal access.

Answer “yes” or “no.”

Answer: YES

QUESTION NUMBER THREE

If your answer to Question Number One or Number Two is
“Yes,” then answer the following question, otherwise, do not
answer the following question.

What sum of money, if any, if paid now in cash, would
fairly and reasonably compensate Interstate for the damages,
if any, that were proximately caused by such fraud?

“Proximate cause” means that cause which, in a natural and
continuous sequence, produces an event, and without which
cause such event would not have occurred. In order to be a
proximate cause, the act or omission complained of must be
such that a person using the degree of care required of him
would have foreseen that the event, or some similar event,
might reasonably result therefrom.

Consider the following elements of damages, if any, and no
other. Answer separately in dollars and cents for the
following:

a. The increase in aviation products
liability

insurance premiums
sustained in the past .

Answer:
$1,700,000

b. Reasonable and necessary expert expenses
incurred in the investigation of the crankshaft failures.

Answer:
$2,715,623.17

QUESTION NUMBER FOUR

If your answer to Question Number One or Number Two is
“Yes,” then answer the following question. Otherwise,
do not answer the following question.

Do you find from clear and convincing evidence that the harm
to Interstate resulted from fraud or malice?

“Clear and convincing evidence” means the measure or
degree of proof that produces a firm belief or conviction of
the truth of the allegations sought to be established.

“Malice” means:

(a) a specific
intent by Lycoming to cause substantial injury to
Interstate; or

(b) an act or
omission by Lycoming,

(i)
which, when viewed objectively from the standpoint of
Lycoming at the time of its occurrence involves an extreme
degree of risk, considering the probability and magnitude of
the potential harm to others; and

(ii) of which
Lycoming has actual, subjective awareness of the risk
involved, but nevertheless proceeds with conscious
indifference to the rights, safety, or welfare of others.

Answer “Yes” or “No.”

Answer: YES

QUESTION NUMBER FIVE

If your answer to Question
Number Four is “Yes,” and is based on a finding of malice,
if any, then answer the following question. Otherwise,
do not answer the following question.

Do you find from clear and convincing evidence that the harm
to Interstate resulted from a specific intent by Lycoming to
cause substantial injury to Interstate?

Answer “Yes” or “No.”

Answer: YES

QUESTION NUMBER SIX

If you have answered “Yes” to Question Number Four, then
answer the following question. Otherwise, do not answer the
following question.

Did Lycoming secure the execution of Second Addendum to the
MSA by deception?

“Securing the execution of a document by deception”
occurs when a person causes another person to sign any
document affecting property, or services, or the pecuniary
interest of any person, having a value of $1,500 or more,
and does so by deception, with the intent to defraud or harm
any person.

“Pecuniary interest” means a direct interest related to
money.

“Property” means: (a) real property; (b) tangible or
intangible personal property, including anything severed
from land; or (c) a document, including money, that
represents or embodies anything of value.

“Deception” means:

(1) Creating or
confirming by words or conduct a false impression of fact
that is likely to affect the judgment of another in the
transaction, and that the actor does not believe to be true;
or

(2) Failing to
correct a false impression of fact that is likely to affect
the judgment of another in the transaction, that the actor
previously created or confirmed by words or conduct, and
that the actor does not now believe to be true; or

(3) Preventing
another from acquiring information likely to affect his
judgment in the transaction.

A person acts with intent with respect to the nature of
his conduct or to a result of his conduct when it is the
conscious objective or desire to engage in the conduct or
cause the result.

Answer “Yes” or “No.”

Answer: YES

QUESTION NUMBER SEVEN

What is a reasonable fee for the necessary services of
Interstate’s attorneys in this case, stated in dollars and
cents?

Answer with an amount for each of the following:

1. For
preparation and trial.

Answer: $4,760,027.80

2. For an
appeal to the Court of Appeals.

Answer: $350,000

3. For
filing or responding to a petition for review to the Supreme
Court of Texas.

Answer: $30,000

4. For
briefing and argument on the merits in the Supreme Court of
Texas.

Answer: $170,000

In determining what is a reasonable fee, consider the
following factors:

a. the
time and labor involved, the novelty and difficulty of the
questions involved, and the skill required to perform the
legal services properly;

b. the
likelihood that the acceptance of the particular employment
will preclude other employment by the lawyer;

c. the
fee customarily charged in the same locality for similar
legal services;

d. the
amount involved and the results obtained;

e. the
time limitations imposed by the client or the circumstances;

f.
the nature and length of the professional relationship with
the client;

g
the experience, reputation, and ability of the lawyer or
lawyers performing the services; and

h.
whether the fee is fixed or contingent on results obtained
or uncertainty of collection before the legal services can
be rendered.

QUESTION NUMBER EIGHT

Was a defect, if any, in
Lycoming’s design of the crankshafts the sole cause of the
crankshaft failures and the resulting service bulletins,
airworthiness directives, crankshaft recall and grounding of
aircraft with Lycoming engines?

A cause is a “sole cause” if it is the only cause of an
event or occurrence. If a cause is the sole cause of
an event or occurrence, then the act or omission of another
person cannot be a cause of the event or occurrence.

A “defect” means a condition of the product that renders it
unreasonably dangerous. An “unreasonably dangerous”
product is one that is dangerous to an extent beyond that
which would be contemplated by the ordinary user of the
product, with the ordinary knowledge common to the community
as to the product’s characteristics.

Answer “Yes” or “No.”

Answer: YES

QUESTION NUMBER NINE

If your answer to Question
Number Eight is “No,” then answer the following questions.
Otherwise, do not answer the following questions.

In answering this
question, you are instructed that an answer of “No” must be
based on a preponderance of the evidence.

Do you find that the
crankshaft failures and the resulting service bulletins,
airworthiness directives, crankshaft recall and grounding of
aircraft with Lycoming engines were directly caused by the
following:

A. Performance of the crankshaft forgings provided
pursuant to the MSA?

Answer “Yes” or “No:”

Answer:
______________

B. Defects (including manufacturing defects), if
any, in the crankshaft forgings created during the forging
process at Interstate?

Answer “Yes” or “No:”

Answer:
______________

C. The breach, if any, of any express warranty for
the crankshaft forgings provided pursuant to the MSA?

Answer “Yes” or “No:”

Answer:
______________

SEQ CHAPTER \h \r 1
“Direct cause” means that cause which in a natural and
continuous sequence produces an event, and without which
cause such event would not have occurred. There can be
more than one direct cause of an event.

A “defect” means a condition of the product that renders it
unreasonably dangerous. An “unreasonably dangerous”
product is one that is dangerous to an extent beyond that
which would be contemplated by the ordinary user of the
product, with the ordinary knowledge common to the community
as to the product’s characteristics.

You may find that
Interstate breached an express warranty under the MSA only
if you find that, because of Interstate’s conduct:

a. the crankshaft forgings did not conform to
the specifications, drawings, samples or other descriptions
furnished, specified or adopted by Lycoming; or

b. the crankshaft forgings were not free from
defects in material and workmanship.

QUESTION TEN

If you answered “Yes” to
any single Question in Question Number Nine, then answer the
following Question. Otherwise, do not answer the
following question.

Do you find that the
crankshaft failures and the resulting service bulletins,
airworthiness directives, crankshaft recall and grounding of
aircraft with Lycoming engines were directly caused by the
negligence of Lycoming, if any?

“Negligence” means failure
to use ordinary care, that is, failing to do that which a
person of ordinary prudence would have done under the same
or similar circumstances or doing that which a person of
ordinary prudence would not have done under the same or
similar circumstances.

“Ordinary care” means that
degree of care that would be used by a person of ordinary
prudence under the same or similar circumstances.

Answer “Yes” or “No.”

Answer ______________

QUESTION NUMBER ELEVEN

SEQ CHAPTER \h \r 1

If you answered “Yes” to
any single Question in Question Number Nine and also
answered “Yes” to Question Number Ten, then answer the
following Question. Otherwise, do not answer the
following question.

The percentages you find
must total 100 percent. The percentages must be expressed in
whole numbers. The percentage attributable to any one
named below is not necessarily measured by the number of
acts or omissions found.

For each entity found by
you to have directly caused the crankshaft failures and the
resulting service bulletins, airworthiness directives,
crankshaft recall and grounding of aircraft with Lycoming
engines, find the percentage caused by --

a.Lycoming
__________________ %

b. Interstate
__________________ %

Total
100
%

SEQ CHAPTER \h \r 1After you retire to the Jury room,
you will select your own Presiding Juror. The first
thing the Presiding Juror will do is to have this complete
charge read aloud, and then you will deliberate upon your
answers to the questions asked.

It is the duty of the Presiding Juror:

1. To
preside during your deliberations;

2. To see
that your deliberations are conducted in an orderly manner
and in accordance with the instructions in this charge.

3. To
write out and hand to the bailiff any communications
concerning the case that you desire to have delivered to the
Judge;

4. To
vote on the questions;

5. To
write your answers to the questions in the spaces provided;
and

6. To
certify to your verdict in the space provided for the
Presiding Juror’s signature, or to obtain the signatures of
all the Jurors who agree with the verdict, if your verdict
is less than unanimous. You should not discuss the
case with anyone, not even with other members of the Jury,
unless all of you are present and assembled in the Jury
room. Should anyone attempt to talk to you about the
case before the verdict is returned, whether at the
courthouse, at your home, or elsewhere, please inform the
Judge of this fact.

When you have answered all the questions you are required
to answer under the instructions of the Judge, and your
Presiding Juror has placed your answers in the spaces
provided and signed the verdict as Presiding Juror, or
obtained the signatures, you will inform the bailiff at the
door of the jury room that you have reached a verdict, and
then you will return into court with your verdict.

January ___, 2005

___________________________________

JUDGE PRESIDING

CERTIFICATE

We, the Jury, have answered the above and foregoing
questions as herein indicated, and herewith return same into
court as our verdict.

Question of the Week

Picture of the Week

As aviation photos go, this was the best this week but there are some great beauty shots when you click through. In the meantime, congratulations to Daniel Gillette for this very nice photo he calls Sunset Pitch-Out. The photo is copyrighted by Gillette.